There’s been a lot of chatter from Agritechnica this year & the products that were on show.
I’ve had several conversations over the last few weeks with farmers & industry people about what I think is an industry transition happening at present & will continue over the next few years.
The buying dynamic of the Australian farmer is changing.
Cost of machinery is getting way out of reach, technology is great when it works, cost of inputs to grow crops is ridiculous, insurance is up, commodities are down, labour is expensive & good labour hard to come by & depending where in Australia you are rain in the right amount at the right time determines a hell of a lot!
Not to mention the cost of water if your an irrigator & a Government who cares little to nothing about Agriculture.
I’m seeing a lot of guys who used to be new equipment buyers now becoming good used buyers because of the above.
The new buyers market is however shrinking which in turn means less good used equipment coming onto the market which is where the demand is growing.
The new Ag guys in the market at Agritechnica (Zoomlion, LiuGong, etc) have product offerings that use common (well known/proven) components that the known brands also use.
There fit & finish seems pretty good on all accounts.
I’m told from someone that attended that a 250hp tractor by one of these brands is a 1/3 of the price of the major brands.
I feel this will be like when Hyundai & Kia came to Australia, people thought they were ok but they were great value. Several years later & they have some of the best vehicles available in Australia with styling, tech & finish to match any big brands or legacy brands as the car market is calling them.
A friend of mine who owns a Toyota dealership is also seeing this change in his industry with more of these Chinese brands entering the market, to say he’s concerned is an understatement.
And with this dynamic change farmers will start looking at alternatives when they can’t find what they want in the good used segment.
For the major price difference & quality components farmers will give these brands a go, & like the car game if they prove reliable & half decent they’ll take off!
There is a caveat to all this…..they will need to setup good warehouse support for parts & service & a dealer network which is not as easy as it sounds, particularly with the existing dealer agreements a lot of the known brands have in place (read all in their favour, not the dealers…) will make it difficult to add a competing brand.
There will be push back. Brand snobs will continue to do what they do but their bottom line will keep decreasing.
But if the equipment can do the jobs & do them well, if these manufacturers can support the products satisfactorily & keep the pricing significantly cheaper than the majors then I think they will fill a space in the market & more & more farmers will go down this path.
Time will tell…